Unemployment Compensation Bill introduced to State House

By: Matt Jaworski

Labor Citizen Writer

A new bill aimed at fixing Ohio’s broken Unemployment Compensation Fund has been introduced to the State House.

The Columbus Dispatch reported State Rep. Kirk Schuring (R-Canton) introduced House bill 382, which would require workers to individually contribute to the benefit system, reduce benefits for the unemployed and increase the tax paid by employers into the fund.

If the bill becomes law, Ohio would become the fourth state in the nation to require employee contributions – joining Alaska, New Jersey and Pennsylvania.

Schuring’s bill comes after nearly 10 months of discussions between business and labor leaders who could not agree on a compromise solution to solvency issues facing Ohio’s Unemployment Compensation Fund.

In the view of the construction industry, it is a step in the right direction compared to past attempts to solve the problem.

Affiliated Construction Trades (ACT) Ohio Executive Director Matt Szollosi represented the construction industry during the talks with business leaders. He said this bill represents a more preferable starting point for discussion than the previous attempts to reform the Unemployment Compensation Fund – HB 620 and HB 394.

While it is a step in the right direction, Szollosi said ACT Ohio is against the bill as it currently stands.

“ACT Ohio is opposed to HB 382 in its current form,” he said. “Only 24 percent of Ohio’s unemployed workers qualify for benefits under current law – there is no justifiable reason to make it harder or to minimize benefits for those who do.”

“It is in our members’ interest to have a solvent unemployment compensation trust fund, and we have been committed to achieving that goal,” said Szollosi. “ACT Ohio has been resolute in its position against benefit cuts, and that a modest employee contribution to help achieve solvency is far more preferable.”

Under the proposed bill, employees will be charged premiums beginning in 2019. The new premiums are expected to raise an estimated $125 million, which would equal roughly 10 percent of the unemployment taxes paid by employers.

The Dispatch reports total premiums paid by workers would increase to $140 million by 2030, remaining at 10 percent of employer contributions to the fund.

Schuring provided the Dispatch data that indicated the annual premium for a worker would range from $5.50 to $112.20 a year, or $0.46 to $9.35 a month.

Rates are based on employee earning and how frequently their employer uses the unemployment compensation system. This sliding scale means employers who seldom layoff workers, such those in the financial sector, would pay the lowest rates, while construction companies would pay among the highest rates.

According to an analysis performed by the nonpartisan Legislative Service Commission, from 2019 to 2030, employees would cover 50.5 percent of the costs, while employers would cover 49.5 percent.

Should a recession occur during that time, the employee rate would increase to an estimated 51.5 percent.

HB 382 would raise the wage base on which employers pay tax from $9,500 to $11,000; freeze benefit levels for the unemployed for 10 years, which means no cost of living increases; and reduce the amount of weeks of available benefits from 26 to 24, with some exceptions.

Szollosi said the impact on eligibility for dependency benefits for claimants with children is unclear and he called the employee co-premium vague, noting questions have arisen regarding its practicality.

Szollosi made it clear ACT Ohio is not in favor of reducing unemployment benefits, as such actions have the potential to harm the construction industry, which is already suffering from a lack of skilled tradesmen and tradeswomen.

Reducing unemployment benefits could send current tradesmen and tradeswomen into other lines of work or be a reason why people give less consideration to the construction industry when looking for work.

“A number of changes need to be made to improve the bill,” said Szollosi. “The position advanced by ACT Ohio is unchanged: no reductions from the current 26 week; no cuts to dependency or other key benefits that help sustain unemployed workers when times get tough.”

The Dispatch said the bill could generate about $370 million a year from 2019 to 2030.

There is also a proposed companion bill that would create a bond issue for voters to approve, which would allow Ohio to issue debt to raise money if the unemployment fund becomes insolvent instead of again borrowing from the federal government as the state did during the Great Recession.

Under the current system, Ohio’s Unemployment Compensation Fund is expected to become insolvent in 2021 with no recession, and in 2020 with a moderate recession. Should Schuring’s bill become law, it keep the fund solvent through 2030 without a recession, and insolvent in 2021 with a moderate recession, although officials estimate the fund would recover quickly.

Schuring told The Dispatch the bill needs changes, but he said the legislation is necessary.

“It’s a starting point,” he said.

“Unemployment compensation is a complicated issue in Columbus, which is why very little has been done with regard to it over the past 25 years,” said Szollosi. “As long as the business interests continue to demand deep benefit cuts, ACT Ohio will continue to oppose such measures and instead fight for responsible unemployment compensation reform.”